European Stocks Slip Ahead of ECB

European stocks ended lower on Wednesday, with the STOXX 50 declining 0.4% and the STOXX 600 remaining flat, as investors adopted a cautious stance amid renewed Middle East tensions following US-Iran strikes and ahead of the ECB’s monetary policy decision on Thursday. The ECB is widely expected to raise interest rates by 25 basis points, with investors closely monitoring policymakers’ signals on the future path of monetary policy. In the US, the May CPI report confirmed inflation reached a three-year high of 4.2%, matching expectations and reinforcing bets on a Federal Reserve rate hike in December. Meanwhile, UK lenders extended losses from the previous session after a JP Morgan note warned of a potentially greater impact from new Chinese regulations. STMicroelectronics also closed slightly lower, despite an upgrade to "buy" from "neutral" by BofA Global Research.

European stocks turned lower after a positive start on Wednesday, with the STOXX 50 falling 0.3% and the STOXX 600 slipping 0.2%, as investors avoided taking large positions while assessing renewed tensions in the Middle East after the US and Iran exchanged strikes and awaiting the ECB's monetary policy decision on Thursday. Meanwhile, the ECB is widely expected to raise interest rates by 25bps this month, with investors closely watching policymakers' guidance on the future path of monetary policy. In the US, attention is also focused on the CPI report due later in the day. HSBC Holdings dropped 2.2% as UK lenders extended losses from the previous session after a JP Morgan note highlighted a potentially greater impact from new Chinese regulations. SAP and Siemens Energy both fell 1.7%, while Thyssenkrupp lost 3.5%. On the upside, STMicroelectronics gained 1.2% after BofA Global Research upgraded the chipmaker to "buy" from "neutral", while Infineon advanced 0.6%.

European stocks edged higher on Wednesday, with the STOXX 50 and STOXX 600 both gaining 0.2%, despite renewed tensions in the Middle East after the US and Iran exchanged strikes. Oil prices swung around the flatline following the developments. Investors are also looking ahead to the ECB's monetary policy decision due tomorrow. Among individual stocks, STMicroelectronics rose 2% after BofA Global Research upgraded the chipmaker to "buy" from "neutral", while Infineon advanced 1.7% and Nestle (1.2%), TotalEnergies (0.7%) and Unicredit (1.4%) also booked gains. In contrast, UK lenders extended losses from the previous session after a JP Morgan note highlighted a potentially greater impact from new Chinese regulations. HSBC and Standard Chartered both fell more than 1%. SAP (-1.7%) and UBS (-1.7%) also traded lower and Sanofi declined 0.9% as the company said it will stop phase 3 trial of riliprubart in CIDP patients.